Libyan rebels fighting to overthrow Muammar Gaddafi have won broad political recognition as the country's "legitimate authority" as well as the promise of huge financial support and a British commitment to intensify Nato bombing.

Recognition of the Benghazi-based national transitional council (NTC) at an Istanbul meeting of the international "contact group" on Friday was one of a number of political and economic measures designed to bolster the opposition and increase pressure on the Libyan leader.

Britain, along with France – the leading partner in Nato air operations – announced it was deploying four more Tornado fighter aircraft, on top of 30 RAF planes already operating. "Military pressure on the regime will continue to intensify," said the foreign secretary, William Hague.

The US secretary of state, Hillary Clinton, insisted that the regime's violence must end. "Increasingly the people of Libya are looking past Gaddafi," she said. "They know, as we all know, that it is no longer a question of whether Gaddafi will leave power, but when."

The emphasis, however, was on a political solution. The UN envoy to Libya, Abdul-Elah al-Khatib, was authorised to present terms for Gaddafi to leave power as part of a Turkish-drafted package that includes talks on a political transition.

"The contact group's decision to deal with the national transitional council as the legitimate governing authority in Libya reflects the NTC's increasing legitimacy, competence and success in reaching out to all Libyans," said Hague. "In contrast, Gaddafi has lost all legitimacy in the eyes of the Libyan people and the international community."

Few contact group member countries now maintain diplomatic relations with the Gaddafi regime and most have shut or mothballed their embassies in Tripoli. Britain has said for some time that it regards the NTC as the "legitimate representative of the Libyan people" but it recognises states, not governments.

For the US, France and others, the decision is expected to have legal implications that will allow billions of dollars in Libyan state assets frozen by UN sanctions to be made available to the NTC.

"We expect this step on recognition will enable the NTC to access additional sources of funding," said Clinton. Officials say there is over $30bn (£26bn) in the US alone.

"It is political support," said Guma El-Gamaty, London spokesman for the NTC. "It means no legitimacy for Gaddafi. It may also have a financial impact that will help us as well."

The UAE, one of two Arab states taking part in the Nato operations, announced that it would open a diplomatic mission in Benghazi.

Turkey's foreign minister Ahmet Davutoglu, chairing the meeting, urged delegates to find "innovative ways" to support the opposition, stressing an "urgent need for cash" before the holy Muslim month of Ramadan, which starts on 1 August. Turkey has already started a $200m credit line. Italy announced a similar move.

It remains unclear whether Gaddafi and his sons will be required to leave the country under any political deal. "Gaddafi must leave power according to a defined framework to be publicly announced," the contact group said. The Libyan leader, wanted for crimes against humanity by the international criminal court, has repeatedly insisted he will not stand down.

Late on Thursday Gaddafi urged supporters to march on Benghazi and Misrata to liberate the cities of traitors.

"We are here and we will stay here on this ground," he pledged in a defiant message relayed by loudspeaker to supporters in al-Ajaylat, 50 miles west of Tripoli. "I will stay with my people until the last drop of my blood is spilled. I too will redeem you with my own life … I will fight until the end."